You are considering a project that you believe is quite risky. To reduce any potentially harmful results from accepting this project

52.

You are considering a project that you believe is quite risky. To reduce any potentially harmful results from accepting this project, you could:    A.  lower the degree of operating leverage. B.  lower the contribution margin per unit. C.  increase the initial cash outlay. D.  increase the fixed costs per unit while lowering the contribution margin per unit. E.  lower the operating cash flow of the project. Refer to section 11.5

53.

Which one of the following characteristics best describes a project that has a low degree of operating leverage?    A.  high variable costs relative to the fixed costs B.  relatively high initial cash outlay C.  an OCF that is highly sensitive to the sales quantity D.  high level of forecasting risk E.  a high depreciation expense Refer to section 11.5

54.

Which one of the following will best reduce the risk of a project by lowering the degree of operating leverage?    A.  hiring temporary workers from an employment agency rather than hiring part-time production employees B.  subcontracting portions of the project rather than purchasing new equipment to do all the work in-house C.  leasing equipment on a long-term basis rather than buying equipment D.  lowering the projected selling price per unit E.  changing the proposed labor-intensive production method to a more capital intensive method Refer to section 11.5

55.	The degree of operating leverage is equal to:    A.  the percentage change in quantity divided by the percentage change in OCF. B.  the percentage change in sales divided by the percentage change in OCF. C.  1 + FC/OCF. D.  1 + VC/OCF. E.  1 - (FC + VC)/OCF. Refer to section 11.5